Inflation has increased from the Bank of England’s 2% target, according to new figures from the Office for National Statistics (ONS).
Measured by the Consumer Prices Index (CPI), annualised inflation rose 2.2% in July, higher than the 2% reported in June, but lower than the 2.3% forecast.
The largest upward contribution to the monthly change came from housing and household services where prices of gas and electricity fell by less than they did last year; the largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.
Core inflation, meanwhile, which takes out volatile factors like energy, food, alcohol and tobacco to give a clear picture of underlying trends, rose by 3.3% in the 12 months to July 2024, down from 3.5% in June, with inflation in the services sector falling from 5.7% to 5.2%.
Martin Sartorius, Principal Economist, CBI, said: “Inflation undershooting the Bank of England’s expectations will be seen a positive sign that price pressures are continuing to normalise for households and businesses.
“Today’s data will give the Bank’s Monetary Policy Committee some measure of confidence that domestic price pressures are less likely to derail a sustainable return to the 2% target. A second consecutive cut in interest rates next month is not a certainty, however. This is because the MPC will still be mindful of upside risks to the inflation outlook, especially as pay growth remains stubbornly high.”
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